HELSINKI, July 19 Nokia investors are
bracing for the Finnish mobile phone maker to report weak sales
of the Lumia phones that are crucial to its turnaround effort
and a rapidly diminishing cash pile, in its second-quarter
results later on Thursday.

Once the world's dominant mobile phone maker, Nokia was late
to embrace smartphones and has lost out to Apple and
Samsung Electronics in the most profitable part of
the market.

It's fighting back with new phones that use Microsoft's
Windows software, but while the Lumia models have won
some good reviews they have had relatively little success among
consumers who are choosing Apple's iPhones and phones running
Google's Android software instead.

Analysts expect Nokia sold 4 million Windows phones in the
second quarter - roughly doubling from the first quarter - but
still only a fraction of Apple's expected sales of 30 million
iPhones or Samsung's 50 million smartphones.

Nokia shares - which have dropped 84 percent since unveiling
its Windows phones strategy - closed at 1.37 euros on Wednesday
in Helsinki, after hitting an 18-year low of 1.33 euros earlier
in the session.

The proportion of Nokia shares out on loan has risen to 13.2
percent in the last month, Markit data showed earlier this week,
as speculative investors took bearish positions ahead of the
report, expecting the shares to fall.

In the three months to June, all three major credit ratings
agencies cut Nokia bonds to "junk" while the company warned
twice on profits and said it planned to cut one in five jobs.

Some analysts, however, said much of the bad news may be
more than priced in after the recent sell-off.

"Fears have been elevated to a level that may be greatly
detached from reality," said Nordea analyst Sami Sarkamies. "The
most interesting will be to see what the company says about the
second half."

Nokia is expected to report a net loss roughly doubling to
706 million euros and burn through more than 1 billion euros of
cash in just three months, according to a Reuters poll of 38
analysts.

Over the past five quarters, the one-time darling of mobile
telecoms has eroded its cash pile by 2.1 billion euros - a rate
that could wipe out its entire 4.9 billion euros reserves in a
couple of years.

On average, analysts expect Nokia's net cash position to
drop to 3.7 billion euros at the end of the second quarter and
to 3.2 billion at the end of third quarter.
(By Tarmo Virki; Editing by Erica Billingham)

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